Washington Performance BondRCW 39.08 Public Works Bonding
Washington requires a combined performance and payment bond on essentially every public works contract under RCW 39.08 — not a performance-only bond. But the decisions that actually matter to a Washington contractor are two the competition rarely explains: whether to post a bond or take the 10% retainage election on jobs of $150,000 or less, and whether to use an RCW 60.28 retainage bond to pull your withheld cash back into working capital.
There is no “$35,000 threshold” in Washington public works law
Several bond sites claim Washington only requires a bond above $35,000. That number appears nowhere in RCW 39.08. The statute requires a contractor's bond on every public improvement contract, period. The only real sub-thresholds are the $150,000 retainage election and the $5,000 small-works waiver — both explained below. We'd rather tell you the law than repeat a myth.
Start Here: The Washington Public Works Bonding Decision Tree
Before you price anything, figure out which rule your contract falls under. Washington's bonding obligation turns on contract value and on a single election the contractor controls. RCW 39.08.010 requires a contractor's bond on every public improvement contract — the bond covers both completion (performance) and payment of labor, materials, subcontractors, and certain taxes under Titles 50, 51, and 82. From there, contract size opens two off-ramps.
At the small end, SB 5268 (effective July 1, 2024) confirmed that small works roster projects under $5,000 can waive both the bond and retainage entirely (RCW 39.04.152). In the middle band — contracts of $150,000 or less — you may elect to have the public body hold 10% retainage for 30 days after final acceptance in lieu of bonds (RCW 39.08.010(3)). Above $150,000, the combined bond is the only path. Federal projects in Washington follow the Miller Act instead.
Which Bonding Rule Applies to Your Washington Public Works Contract?
Contract value and project owner determine your obligation
| Contract Value / Type | Bond Required? | Alternative | Governing Authority |
|---|---|---|---|
| Small works roster under $5,000 | Optional | Bond and retainage may both be waived | RCW 39.04.152 (SB 5268, eff. 7/1/2024) |
| $5,000 – $150,000 | Contractor may elect | 10% retainage for 30 days after final acceptance, in lieu of bonds | RCW 39.08.010(3) |
| Over $150,000 (state / county / district) | Yes — required | None — combined performance + payment bond | RCW 39.08.010 & .030 |
| Federal project in WA (USACE, federal-aid) | Yes — Miller Act | None for federal contracts over $150,000 | 40 U.S.C. 3131–3134 |
The much-repeated $35,000 threshold does not exist. The only sub-thresholds in RCW 39.08 are the $5,000 small-works waiver and the $150,000 retainage election.
Sources: RCW 39.08.010, RCW 39.08.030, RCW 39.04.152, 40 U.S.C. 3131–3134
Under $5,000
Small works roster jobs can skip both bond and retainage — the lightest path, confirmed by SB 5268.
$5K – $150K
You choose: post the combined bond, or let the agency hold 10% retainage for 30 days after acceptance.
Over $150,000
Combined performance + payment bond at 100% of contract price. No election available.
The $150,000 Decision: Bond Now, or Let Them Hold 10%?
This is the choice most Washington contractors don't realize they have. On a public improvement contract of $150,000 or less, RCW 39.08.010(3) lets you skip the bond and instead authorize the public body to retain 10% of the contract amount for 30 days after the date of final acceptance. After that window closes with no valid claims, the retained money is released to you. It's a real, statutory alternative — not a workaround.
The trade-off is pure cash flow. The retainage path has no premium and no surety underwriting, but it ties up 10% of the contract — your money — until well after the job ends. The bond costs a premium but keeps that capital working. Run our performance and payment bond calculator against the carrying cost of the retained cash before you decide.
Elect 10% Retainage
- No premium, no surety underwriting
- Available only on contracts of $150,000 or less
- 10% of the contract is withheld — your working capital, tied up
- Released 30 days after final acceptance, if no claims
Best for: occasional public work, strong cash position, lowest-cost single job.
Post the Combined Bond
- Keeps 100% of your cash free to run the job
- Required above $150,000 — build the habit early
- Premium only — a fraction of the bond amount
- Builds your bonding track record with a carrier
Best for: running multiple jobs, tight working capital, scaling into larger public bids.
Official Washington Requirements
"Whenever any board, council, commission, trustees, or body acting for the state or any county or municipality... shall contract with any person or corporation to do any work for the state, county, or municipality... such board, council, commission, trustees, or body shall require the person or persons with whom such contract is made to make, execute, and deliver to such board... a good and sufficient bond, with a surety company as surety, conditioned that such person... shall faithfully perform all the provisions of such contract and pay all laborers, mechanics, and subcontractors and materialmen."Washington State Legislature • RCW 39.08.010
The RCW 60.28 Retainage Bond: Get Your Withheld Cash Back
This is the lever most contractors leave on the table. Wholly separate from the performance and payment bond, RCW 60.28.011 lets the public body withhold up to 5% of your contract as a retainage trust fund — cash held back to protect subcontractors, suppliers, and the state's tax claims until the project closes out. On a $1 million job that's $50,000 of your money sitting in an agency account for months.
A retainage bond lets you substitute a surety bond for that withheld cash, and the statute says the public body must accept it absent a good-faith reason not to. Once accepted, the bonded retainage is released to you within 30 days. You convert dead capital into working capital for the cost of a modest premium. The surety underwrites the bond on your financials and the carrier is expected to be rated at least A- by A.M. Best.
Two timing rules sit behind retainage: a lien claimant has 45 days after completion, acceptance, or abandonment to file a notice of lien against the retained funds, and then a four-month window to foreclose. Federal-transportation-funded projects generally rely on the RCW 39.08 bonds rather than the retainage substitution, so confirm the funding source before you plan around it.
Two bonds, two jobs: the performance and payment bond protects the owner and unpaid claimants; the retainage bond protects your cash flow. A contractor running several Washington public jobs at once can have both working on the same project. See how they pair on our combined performance and payment bond page.
Payment Bond Claims: The Notice Ladder That Makes or Breaks Recovery
The payment half of the RCW 39.08 bond protects subcontractors and suppliers — but only if they hit the notice deadlines. Washington keys the master deadline to the public body's formal acceptance, which catches out-of-state subs used to a last-work-date clock.
Washington Public Works Payment Bond Claim Deadlines
Who must do what, and by when, to preserve a bond claim
| Step | Who | Deadline | Statute |
|---|---|---|---|
| Preliminary notice | Sub-tier claimant with no direct contract with the prime | Within 10 days of first furnishing labor/materials | RCW 39.08.065 |
| Notice of claim | All claimants (first-tier and sub-tier) | Within 30 days after the public body’s formal acceptance | RCW 39.08.030 |
| Attorney fees available | Successful claimant who filed the 30-day notice pre-suit | Recoverable on a successful claim | RCW 39.08.030 |
The 30-day clock starts at formal acceptance of the completed work — not the claimant’s last day on the job. Sub-tier claimants must also clear the 10-day preliminary notice.
Sources: RCW 39.08.030, RCW 39.08.065
For sub-tier suppliers: the 10-day preliminary notice under RCW 39.08.065 is the one most often missed. If you have no direct contract with the prime, your bond rights start eroding from your very first delivery. Send the preliminary notice immediately, then calendar the 30-day post-acceptance window. Both are required to keep the claim — and the attorney-fee recovery — alive.
What a Washington Performance Bond Costs
Your premium is a percentage of the contract value, not a flat fee. As an industry estimate, well-qualified contractors land around 0.5% to 1.5% of the contract; the rate climbs to roughly 2% to 3% as financials, experience, or credit get thinner. On a $300,000 Washington public works job that's a spread from roughly $1,500 to $9,000 for the combined performance and payment bond.
Credit sets the baseline, but underwriters weigh working capital, net worth, years in business, your largest completed project, and current backlog at least as heavily. A retainage bond is priced on the same factors. For the full breakdown, see our surety bond cost guide, or size a specific job with the performance bond calculator.
Because RCW 39.08 bonds the performance and payment obligations together, you pay one combined premium rather than two separate ones — a structural cost advantage over states that bond them separately.
Washington Performance Bond Cost by Credit Tier
Based on a $300,000 contract bond amount
- Excellent (750+)Rate: 0.5-1%$1,500-$3,000
- Good (680-749)Rate: 1-2%$3,000-$6,000
- Fair (620-679)Rate: 2-3%$6,000-$9,000
- Below 620Rate: 3-5%+$9,000-$15,000+
Industry estimate for a combined performance + payment bond on a $300K contract — not a government-set rate. Actual pricing depends on financial statements, experience, and project scope.
How Washington Sizes the Bond Amount
The standard bond amount under RCW 39.08.030 is 100% of the contract price for state, county, and most public bodies. There is one wrinkle worth knowing: cities and towns may set a floor as low as 25% of the contract price, though 100% remains the standard practice you should expect on a city bid unless the solicitation says otherwise.
Two alternative delivery methods size the bond differently. On a design-build contract, the bond is set to the construction-portion value rather than the full design-plus-construction price. On a job order contract (JOC), the bond is sized to the value of the open work orders rather than the full ceiling of the master agreement. If you bid alternative delivery, confirm the bond basis in the solicitation so you don't over- or under-bond the award.
The surety must be authorized to write bonds in Washington. We place these only with WA-authorized carriers, but the awarding body will verify the surety's standing before accepting the bond, so the authorization matters as much as the amount.
Quick Reference: Bond Amount by Project
Your L&I Registration Bond Is Not Your Project Bond
This is the single most common mix-up among Washington contractors moving into public or commercial work. The two bonds answer to different parties, are sized differently, and one cannot substitute for the other.
L&I Registration Bond (RCW 18.27)
- Fixed: $30,000 general / $15,000 specialty
- Lets you legally register and operate statewide
- Protects consumers, not project owners
- Same amount regardless of job size
Project Bond (RCW 39.08)
- Sized to the contract — typically 100% of price
- Required to win a public works award
- Covers both completion and payment of claimants
- Underwritten on bonding capacity, project by project
Carrying the L&I bond does not satisfy a project owner, and the project bond does not satisfy registration. A Washington GC stepping into public work needs both at once. Prevailing wage under Chapter 39.12 also applies to that public work — a separate compliance obligation that runs alongside the bond.
From the Producer's Desk: When the Retainage Option Beats a Bond — and When It Doesn't
The $150,000 retainage election looks like a free pass — no premium, no underwriting. In practice the right call comes down to one question we ask every contractor weighing it: how much is your working capital actually worth to you right now? If you only chase the occasional small public job and you're sitting on cash, letting the agency hold 10% for 30 days after acceptance can be the cheaper route. The math flips the moment you're running more than one job. Ten percent of a $120,000 contract is $12,000 you can't use to make payroll, buy materials, or mobilize the next project. A bond premium of a few hundred dollars to keep that $12,000 working is an easy trade for a contractor with a full schedule.
The retainage bond under RCW 60.28 is the most underused cash-flow tool in Washington public works. We routinely see contractors leave 5% of a seven-figure contract sitting in an agency trust account for months because nobody told them they could bond it out. When a contractor asks us to free up that retainage, the underwriter looks at the same things they would for any contract bond: working capital, net worth, the trend across the last two or three fiscal years, and a clean work-in-progress schedule showing the open jobs and where margins are landing. A contractor with accountant-prepared financials and a tidy WIP gets the retainage bond approved fast; cash-basis books and thin equity slow it down. The single best move a Washington GC can make before the first public bid is getting reviewed financials in order — that one document opens both the project bond and the retainage bond.
One more thing we flag constantly: the L&I registration bond does not buy you any bonding capacity. Showing up to a public bid with a $30,000 registration bond and no surety relationship is the most common reason a first-time public-works contractor scrambles at award. Build the surety relationship before you need it, not the week the bid is due.
Washington Public Works Bonding Questions
Answers grounded in RCW 39.08, RCW 60.28, and RCW 18.27
Is there a $35,000 threshold below which Washington public works don’t need a bond?
No. There is no $35,000 threshold in Washington law — that figure shows up on competitor sites and is simply wrong. RCW 39.08.010 requires a contractor’s bond on every public improvement contract, with no dollar floor for the general rule. The only sub-thresholds that actually exist are different: on contracts of $150,000 or less the contractor may elect 10% retainage in lieu of a bond (RCW 39.08.010(3)), and small works roster projects under $5,000 may waive both bond and retainage (RCW 39.04.152, as amended by SB 5268 effective July 1, 2024). If anyone quotes you a $35,000 cutoff, ask them to cite the statute — they can’t, because it doesn’t exist.
Should I post a bond or elect 10% retainage on a $120,000 public works job?
On a contract of $150,000 or less you genuinely get to choose, and the right answer depends on cash flow. Electing 10% retainage under RCW 39.08.010(3) means the public body withholds 10% of every payment and releases it 30 days after final acceptance, with no surety, no premium, and no underwriting — but you finance the project with $12,000 of your own working capital tied up the whole time. A performance and payment bond costs a premium (often a few hundred to a couple thousand dollars at this size) but keeps your cash free to run the job and start the next one. Contractors with tight working capital who only do occasional public work often take the retainage; those running multiple jobs almost always bond, because their cash is worth more than the premium.
What is a Washington retainage bond and how does it free up my cash?
Separate from the public works payment bond, RCW 60.28.011 lets the public body hold up to 5% of your contract as a retainage trust fund — cash you don’t see until the project closes out. A retainage bond lets you substitute a surety bond for that withheld cash, and the public body must accept it absent a good-faith reason not to. Once accepted, the bonded retainage is released to you within 30 days. On a $1 million job that converts $50,000 of trapped retainage back into usable working capital for the cost of a small premium. The surety underwrites it on your financials and typically wants a carrier rated A- or better by A.M. Best on the bond form. Federal-transportation-funded projects generally rely on the RCW 39.08 bonds rather than the retainage substitution.
How does a subcontractor or supplier file a payment bond claim in Washington?
The claim ladder under RCW 39.08 is unforgiving on deadlines. A sub-tier claimant who has no direct contract with the prime must give a preliminary notice within 10 days of first furnishing labor or materials (RCW 39.08.065) to preserve bond rights. Then every claimant — first-tier or sub-tier — must file notice of claim within 30 days after the public body’s formal acceptance of the completed work (RCW 39.08.030). A claimant who files that 30-day notice before filing suit can recover attorney fees if successful. Miss the 10-day or 30-day window and the bond claim can be barred regardless of how much you are owed. Keep dated delivery records and send notices by certified mail.
Does my $30,000 L&I registration bond cover my public works project?
No — these are two completely separate instruments. The contractor registration bond required under RCW 18.27 ($30,000 for general contractors, $15,000 for specialty contractors) is a fixed license bond that lets you legally register and operate in Washington. It does nothing for a project owner. A public works award requires a separate RCW 39.08 performance and payment bond sized to the contract (typically 100% of contract price), underwritten on your bonding capacity rather than a flat dollar figure. Carrying the L&I bond does not satisfy the project bond, and the project bond does not satisfy registration. See our Washington contractor registration bond page for the licensing side.
When does the federal Miller Act apply instead of RCW 39.08 in Washington?
The federal Miller Act governs when the project owner is the federal government, not the dollar size of the job. Federal buildings, U.S. Army Corps of Engineers work, and WSDOT projects funded with federal-aid highway dollars where the contract is directly federal fall under the Miller Act, which requires performance and payment bonds on federal contracts exceeding $150,000. RCW 39.08 governs Washington state, county, city, school district, and special-district public improvement contracts. A contractor working both will see two frameworks: state acceptance-based 30-day claim notices under RCW 39.08 versus the federal 90-day/one-year Miller Act timeline. Confirm which body owns the contract before you size or file anything.
New to construction bonding? Our learning center covers the fundamentals, and our bond cost guide breaks down pricing. Bidding the job means a bid bond at tender, then the combined performance and payment bond at award. Working a federal project in Washington? The Miller Act framework lives on our federal government-contract performance bonds page. Comparing states? See how California handles public works bonding, or browse the performance bond hub for other states.
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